Amway Case Study: Patience Is A Virtue
Amway expands into China
The background
China is on the verge of surpassing all known growth records. To begin with, far from being a slowly emerging economic force, it is already the world’s third largest economy trailing only USA and Japan but not for much longer. By the year 2015 it could be the world’s largest. But of course the size of the economy does not equate to standard of living. Within china itself, the major growth is taking place in the coastal regions where roughly one quarter of the population lives, a total of 300 million people, where income is set to grow at 11% a year for the next ten years. To quote Lee Kuan Yew, formerly Prime Minister of Singapore, ‘never in human histories have so many grown so rich so fast’.
China with 1.2billion people, 25% of the world’s population, offers the greatest single opportunity and threat for Western products.Guadong Province, neighbouring on Hong Kong, with 60million people, is china’s showpiece. Since the barriers with Hong Kong ceased in 1978, its GDP has grown 13% per annum and is generally proving to be the springboard for western products. For example, Guadong is Procter and Gamble’s second largest market worldwide for shampoos.
Entering the Chinese market
Patience is a virtue, creativity is a must! More open than the Japanese market, nevertheless the careful cultivation of special relationships from influential people down to the everyday consumer is important in doing business. The word for this is guanxi-Chinese for connections. Cultivating connections is part of the culture, with word of mouth counting for more than most of the other forms of marketing communications. Whilst it is true that the market poses challenges to foreign investors, many companies are discovering the key to success is to start at the local level, learn the market, develop trust with Chinese partners and let each experience make the relationship stronger. In other words, the traditional western approach as exemplified by the
The background
China is on the verge of surpassing all known growth records. To begin with, far from being a slowly emerging economic force, it is already the world’s third largest economy trailing only USA and Japan but not for much longer. By the year 2015 it could be the world’s largest. But of course the size of the economy does not equate to standard of living. Within china itself, the major growth is taking place in the coastal regions where roughly one quarter of the population lives, a total of 300 million people, where income is set to grow at 11% a year for the next ten years. To quote Lee Kuan Yew, formerly Prime Minister of Singapore, ‘never in human histories have so many grown so rich so fast’.
China with 1.2billion people, 25% of the world’s population, offers the greatest single opportunity and threat for Western products.Guadong Province, neighbouring on Hong Kong, with 60million people, is china’s showpiece. Since the barriers with Hong Kong ceased in 1978, its GDP has grown 13% per annum and is generally proving to be the springboard for western products. For example, Guadong is Procter and Gamble’s second largest market worldwide for shampoos.
Entering the Chinese market
Patience is a virtue, creativity is a must! More open than the Japanese market, nevertheless the careful cultivation of special relationships from influential people down to the everyday consumer is important in doing business. The word for this is guanxi-Chinese for connections. Cultivating connections is part of the culture, with word of mouth counting for more than most of the other forms of marketing communications. Whilst it is true that the market poses challenges to foreign investors, many companies are discovering the key to success is to start at the local level, learn the market, develop trust with Chinese partners and let each experience make the relationship stronger. In other words, the traditional western approach as exemplified by the